Intrepid Capital Management May 31 st , 2015 Our Firm Intrepid - - PowerPoint PPT Presentation

Intrepid Capital Management

May 31st, 2015

Our Firm

Intrepid Capital offers investors a truly Global Access across Developed, Emerging and Frontier

• Markets. It is a Cayman-Island Based independent financial services firm established in 2012.

Exceptional Track Record Our team has generate 17% annualized returns over the past 6.5 years, outpacing all of developed, emerging and frontier market indices, with only 1 annual loss period. Superior Investment Portfolio Our flagship fund’s average portfolio company trades at PE < 9 and EV/EBITDA < 5, while also offering higher dividend yields, free cash flow and Returns on Capital compared to benchmarks. Global Mandate Investing Globally across all company sizes and countries allows us access to a wider range of market inefficiencies and asset mispricings. We inevitably achieve low exposure to expensive markets. Diversified Experience Intrepid Capital Professionals have had combined 30 years experience in Investment Banking, Private Equity, Asset Management, Equity Brokerage across North America, Europe, Middle East and South Asia Strong Sponsors The Directors come from one of the most prominent business families in the GCC. They have seeded the fund with $5 million, after seeing the success of the Investment Team in managing the Group Portfolio

Fund Directors

• Ajlan Abdulaziz Al Ajlan
• Mohammed Abdul Aziz Al Ajlan
• Fahad Abdulaziz Al Ajlan

Investment Team

Imran Salahuddin CFA Chief Investment Officer

Imran has more than 20 years’ experience in the financial markets having worked in various roles in Investment banking, private equity and asset management in North America, Europe, the Middle East and South Asia. He is currently the chief investment officer of the Ajlan & Bros Group and

• versees the investment holdings of the Company in

global public equities, private equity and hedge funds, direct private equity and U.S. real estate. He has prior work experience with Samba Capital, Samba Financial Group, ABN AMRO Asset Management, Mirant Corporation, ABN AMRO Bank and KASB

• Securities. He actively follows the global investment

scene and is an avid follower of some of the best value investors. He has an MBA in finance from Yale University and BA in Economics from Oberlin College.

Usman Farooqui CFA Investment Manager

Usman has nearly 10 years experience in the financial markets, having worked in roles in both sell side brokerage and asset management in the Middle East and South Asia. He is currently ‘Investment Manager’

• f the Ajlan & Bros Group and is part of the team that

actively manages a global public equity portfolio and

• versees group investments in Private equity, Hedge

funds and Real estate. Usman has previously served as head of Equity research and vice president of the International Equity Sales for Alfalah Securities. He is an avid writer on economics, investment and finance topics and contributes as a columnist for the ‘Express Tribune’ newspaper, an affiliate of the ‘International Herald Tribune’. He has a BSc Economics degree from Lahore University of Management Sciences (LUMS). He has also completed 2 parts of UK-based Association of Chartered Certified Accountants (ACCA) program and stood first in one of the papers among nearly 9,000 students. Usman also won the J.W. Fulbright Scholarship to study Masters Finance (MSc) at Boston College.

6-year Track Record – Managed Accounts

• Investment team has Managed a USD 35mn internal public equity portfolio for Ajlan Bros Group since 2009.
• Performance includes average cash balance of 17%, maintained to exploit sudden market movements.
• 6-year Performance Record (2009-2014) reviewed by KPMG. Report available on request

Performance Return (USD) 2009 2010 2011 2012 2013 2014 Annualized Ajlan Group Portfolio 34.8% 16.4%

• 12.0%

28.2% 20.1% 21.0% 17.1% MSCI World (Developed Markets) 27.0% 9.6%

• 7.6%

13.2% 24.1% 2.9% 10.9% MSCI Emerging 74.4% 16.3%

• 20.4%

15.1%

• 5.0%
• 4.6%

9.1% MSCI Frontier 7.0% 18.8%

• 22.0%

4.7% 21.4% 2.9% 4.4% Saudi Tadawul 27.4% 8.1%

• 3.1%

6.0% 25.5%

• 2.4%

9.6% S&P Total Return 26.5% 15.0% 2.1% 16.0% 32.3% 13.7% 17.2%

Intrepid Global Opportunities Fund

• Flagship Fund of Intrepid Capital Management. Launched on October 1st, 2014
• Focus: Long Equities (stocks), but can also Short and Invest in Debt Securities.
• Geography: Access to more than 60 Country Stock Markets and adding over time.
• Target Returns: 15% p.a (net of fees)
• Concentration: Top 10 holdings - 40%, Bottom 30-50 holdings - 60%
• Leverage: None

HOLDINGS BY COUNTRY - MAY 31ST, 2015

Fund Performance

Period Intrepid Global MSCI World MSCI Emerging MSCI Frontier 2015 May 5.5% 0%

• 4.1%
• 4.1%

2015 YTD 19.1% 4.1% 5.0%

• 5.2%

Since Oct 1 2014 (inception) 12.8% 4.7%

• 0.3%
• 17.3%

The Fund’s Investment Performance has been far superior to major benchmark indices. We expected this after a proven 6-year track record of following the same strategy.

Investment Philosophy - Value Investing

• Perform valuation and buy cheap
• Hold as long as its cheap (few months to years)
• Sell when stock gets to fair value
• Repeat the process

Investment Framework

Stock Screening PE < 10 <7% in single stock Investment Process Risk Management Typical Features of Investments PE < 9, EV/EBITDA <5 High Return on Capital Dividends / Buybacks Long-term Earnings Growth Discount to Asset Value Stock Screening Company Research Industry / Macro Analysis Investment Thesis Debates Proprietary Evaluation Model <15% in single Frontier Market country <20% in single industry Hold Cash when

• pportunities fail to

meet our criteria. Low Overall Portfolio Valuation Insider Owners Daily Monitoring of Company News Little to no debt on Balance Sheet Avoiding Companies we do not understand.

Current Market Opportunities

China / Hong Kong: (37% or our Portfolio)

• Current weakness in Chinese Real Estate Market are creating unprecedented buying opportunities in Hong Kong

listed Chinese companies, with strong domestic presence or exports prowess.

• The Shanghai Index is up 140% over the past 12 months, but the Hang Seng (Hong Kong) is up only 20%. We think

this valuation Gap has to narrow with HK index trading at PE of just 11, compared to 25 for Shanghai.

Big Emerging Markets:

• Markets like India, Indonesia, Thailand, South Korea, Russia etc. have large number of small to medium size listed

companies which are usually ignored by Global Investors and so are fertile source of hidden gems.

Frontier Markets

• Due to history of economic-political instability eg. Egypt, Pakistan, Vietnam, Sri Lanka usually offer quality businesses

with earnings growth and good management at cheap valuations.

Strategies

Sample Picks

Strategies CORE Peripheral 1 Peripheral 2 Growing Companies at Cheap Valuations Companies trading at big discount Balance Sheet Assets Quality Companies at Reasonable Prices Nozha Hospital Keck Seng Investments Dubai Refreshments Market Cap (USD mn) 20 335 502 Price Earnings 7.8 9.9 12.8 5 yr Operating Income CAGR 35% 11% 34% Return on Core Equity 45% 14% 22% Dividend Yield 3.2% 2.0% 3.1% Price / Book 2.1 0.7 2.2 Excess Cash + Investments (USD mn) 5 180 54 Business Model Busy Hospital Catering to mid-to-low market in Cairo, mainly insurance customers Owns and Operates global franchise hotels in US, Japan, China, Canada, etc. Sole Pepsi Distributor in Dubai and the Northern Emirates Investment Thesis Our typical holding. Growth with Good Return on Capital Trading at 30% discount to

• NAV. Quality Assets such as

W Hotel in San Francisco. Coke and Pepsi Bottlers trade at 17 PE and above. Capacity about to triple by year end.

Fund – Summary of Terms

• 0% Management Fees – We get paid only when our investors make money
• We recommend investors to invest a minimum of 3 years to gain benefit from our strategy
• The Directors have seeded the fund with $5mn

Structure Cayman Island Open-ended Fund for non-US and US tax exempt investors Base Currrency USD Minimum Subscription $100,000 Fiscal Year Dec 31st Subscription Fee 0.75%, payable on first and any subsequent subscriptions Management Fee 0% Incentive Fee 18% of net realized and unrealized appreciation, payable quarterly Hurdle High Watermark Withdrawals Quarter-end redemption, with 20 business days notice. Prime Broker / Custodian HSBC Private Bank (Suisse) Outside Auditor KPMG Legal Counsel Campbells Fund Administrator APEX fund Services Pricing Independent Quarterly Pricing by APEX

Best Practices, Compliance & Safeguards

• Detailed Monthly Investment Letters
• Third-Party Pricing and Fund Accounting
• Directors have substantial capital invested alongside investors.
• Independent qualified custodians - HSBC Private Bank
• Experienced managers focused on day-to-day running of business.
• Registered with Cayman Islands Monetary Authority and USA FACTA Regulations
• Annual Audit by KPMG
• Pricing Verification
• Prime Brokers – HSBC Private Bank
• Independent Administrator – APEX Fund Services
• Independent Fund Administrator
• Reconciles Cash and positions daily with Prime Brokers
• Pricing and Fund Accounting
• Anti money-laundering checks

Why Public Equities (Stocks)?

• Have Performed Better than any other asset class in history
• High Liquidity
• Easy Diversification
• Simple Investment Execution and Monitoring.

1978 - 2010 Average Return p.a

• Std. Deviation

US Real Estate Market Indices (NCREIf, NAREIT) 9.1% 8.4% Barclays Capital Aggregare Nomd Index (Bonds) 8.8% 7.9% S&P 500 12.6% 18.3% Russel 2000 12.4% 21.3% Morgan Stanley EAFE International Stock Index 12.3% 24.1% S&P GSCI Total Return Index (Commodities) 7.9%

Sources: NCREIF, NAREIT, S&P, Russell, Barclays Capital, MSCI, Clarion Partners Research & Investment Strategy, Bloomberg. Note: Average returns are calculated using annual returns from 1979-2010; Standard deviations are based on annual returns. The Real Estate Market Indices are for Total Return ie. Capital Appreciation + Net Operating Income Yield Given time period reflects maximum data available for the NCREIF Real Estate Index

Why go-Global Strategy ?

• Simply more Opportunities available
• Diversification
• Protect Downside by rotating out of expensive markets into cheaper ones.
• Global Managers develop far greater insight when evaluating and comparing individual investments.

Source: Schwab Center for Financial Research with data from Morningstar Inc. United States represented by Dow Jones U.S. Total Stock Market

• Index. International represented by MSCI EAFE Index net of taxes. The 75/25 hypothetical portfolio is rebalanced monthly with dividends and

capital gains reinvested, excluding transaction costs. The example is hypothetical and provided for illustrative purposes only. It is not intended to represent a specific investment product. MSCI EAFE is the measure of the equity market performance of the developed markets of Europe, Australasia, and Far East. Time period is from January 1971 to December 2011. Risk is measured by the annualized standard deviation of monthly returns

Fertile Areas To Look For Undervaluation

Small caps - Illiquid Stocks in International markets

• More volatile, giving more opportunities to buy cheaply
• Lack of Information
• No Analyst Coverage
• Faster Growth

Disclaimer

Intrepid Global Opportunities Fund (“IGOF") is an exempted company incorporated with limited liability under the law of the Cayman Islands. Applications for shares of IGOF can only be made on the basis of the current prospectus. Investing in the shares of IGOF involves certain risks, as more fully described in the prospectus. There can be no assurance that the investment objective of IGOF will be met or that its investment program will be successful. Intrepid Global Opportunities Fund (“IGOF”) is an exempted company incorporated with limited liability under the law of the Cayman Islands as an open-ended investment company. This document has been prepared and issued by Intrepid Capital Management (“ICM”), the investment manager, which is authorised and regulated by the Cayman Islands Monetary Authority (“CIMA”). The investment programmes of the Funds are speculative and entail substantial risks. Interests in the Funds may be subject to sudden and large falls in price or value and there could be a large loss on realisation which could equal the amount invested. As there is no recognised market for the interests, it may be difficult for an investor to sell or realise the interests or to obtain reliable information about their value or the extent of the risks to which they are exposed. Changes in rates of exchange may have an adverse effect on the value, price or income of the interests. References to future returns are not promises or even estimates of actual returns an investor may achieve. The forecasts and material contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The information herein reflects prevailing conditions and ICM’s judgement as of this date, all of which are subject to change. Past performance or experience does not give a guide for the future.. Indices are unmanaged; the figures for the index reflect the reinvestment of dividends but do not reflect the deduction of any fees or expenses, which would reduce returns. Investors may not be able to invest directly in an index. The portfolio characteristics and risk controls set forth are not static and may change over time. ICM does not represent that the statistics, investment guidelines, capital allocation and limits disclosed herein will remain constant over time. The portfolio risk management process includes an effort to monitor and manage risk, but should not be confused with and does not imply low risk. The information and opinions contained in this document are for background purposes only and do not purport to be full or complete. No reliance may be placed for any purpose on the information or opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy

• r completeness of the information or opinions contained in this document by ICM and no liability is accepted ICM for the accuracy or completeness of any such information or
• pinions. This information is being circulated by the ICM on a confidential basis. The information contained herein is confidential to such person and is neither to be disclosed to any
• ther person, nor copied or reproduced, in any form, in whole or in part without the prior consent of the ICM. ICM believes that the source of this information is reliable however it

cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness, merchantability or completeness of any information or data (whether prepared by ICM or by any third party) for any particular purpose or use or that the information or data will be free from error. BHAM does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither ICM, nor any of its affiliates, directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information. Recipients of this document who intend to apply for interests in the Funds are reminded that any such application may be made solely on the basis of the information and opinions contained in the prospectus relating thereto when available, which may be different from the information and opinions contained in this document. Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any investments. This document does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any shares or any other interests nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore.